Can I Get Medicare If My Employer Offers Health Insurance?

Many individuals wonder if they can have both employer-sponsored health insurance and Medicare. Understanding how these two types of coverage interact is important for making informed decisions about healthcare access and costs.

Having Employer Coverage and Medicare Simultaneously

Many individuals can have both employer-sponsored health insurance and Medicare concurrently. Medicare generally becomes available for those aged 65 or older, or for individuals with certain disabilities or specific medical conditions, such as End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS). Being covered by an employer’s health plan does not automatically disqualify someone from Medicare enrollment. Instead, it introduces considerations about how the two coverages interact.

Medicare eligibility does not mandate immediate enrollment if active employer coverage is in place. However, delaying enrollment in certain parts of Medicare may have future implications.

Determining Primary and Secondary Coverage

When an individual has both employer-sponsored health coverage and Medicare, rules dictate which plan pays first for healthcare services; this is known as coordination of benefits. The primary payer is the insurance plan that pays a medical claim first, up to the limits of its coverage. The secondary payer then covers remaining eligible costs. These coordination rules are primarily determined by the size of the employer.

For employers with 20 or more employees, the employer’s group health plan is typically the primary payer for active employees aged 65 or older, and Medicare acts as the secondary payer.

Conversely, if the employer has fewer than 20 employees, Medicare is generally the primary payer for individuals aged 65 or older. In this situation, the employer’s health plan becomes the secondary payer. Individuals working for smaller employers should typically enroll in both Medicare Part A and Part B when first eligible to avoid significant out-of-pocket costs, as their employer plan may pay little or nothing until Medicare has paid its portion.

Making Medicare Enrollment Decisions While Working

Understanding the timing for Medicare enrollment is important, particularly for those with employer coverage. The Initial Enrollment Period (IEP) is a seven-month window for most individuals turning 65, beginning three months before their birth month, including their birth month, and extending three months after. During this period, individuals can sign up for Medicare Parts A and B without penalty.

If someone misses their IEP and does not qualify for a Special Enrollment Period (SEP), they might enroll during the General Enrollment Period (GEP). The GEP runs from January 1 to March 31 each year, with coverage becoming effective the month after enrollment. However, enrolling during the GEP can result in late enrollment penalties for Medicare Part B, and in some cases, for Part A.

A Special Enrollment Period (SEP) is typically available for individuals who delay Medicare Part B enrollment due to active group health plan coverage from current employment, whether their own or a spouse’s. This SEP allows enrollment without penalty at any time while the individual is covered by the employer plan, and for up to eight months after employment ends or the employer coverage ceases, whichever happens first. To utilize this SEP, individuals must typically submit Form CMS-40B and Form CMS-L564, which verify active employment and health coverage.

Failing to enroll in Medicare Part B during the appropriate enrollment period, such as the SEP, can lead to a late enrollment penalty. This penalty adds 10% to the standard Part B premium for each full 12-month period that enrollment was delayed without creditable coverage. This increased premium is typically applied for as long as the individual has Medicare Part B. While most people do not pay a premium for Medicare Part A, if a premium is required and enrollment is delayed without a SEP, a penalty of 10% may be added to the monthly premium for twice the number of years enrollment was delayed.

Addressing Special Circumstances

Health Savings Accounts (HSAs)

Individuals contributing to a Health Savings Account (HSA) must be aware of specific rules when considering Medicare enrollment. Once enrolled in any part of Medicare, including premium-free Part A, an individual is no longer eligible to make new contributions to an HSA. This applies to both employee and employer contributions.

If contributions are made after Medicare enrollment, they are considered excess contributions and may be subject to a 6% excise tax. Medicare Part A coverage can be retroactive for up to six months, though not earlier than the month of eligibility. To avoid penalties, individuals planning to enroll in Medicare after age 65 should stop their HSA contributions at least six months before their intended Medicare enrollment date. Funds already accumulated in an HSA can continue to be used tax-free for qualified medical expenses, even after Medicare enrollment.

COBRA Coverage

COBRA allows individuals to continue their health coverage for a limited time after certain qualifying events, such as job loss. However, COBRA coverage is generally not considered “active employer coverage” for the purpose of delaying Medicare Part B enrollment without penalty. If an individual relies solely on COBRA after leaving employment and delays Medicare Part B enrollment, they may face late enrollment penalties.

When an individual becomes eligible for Medicare while on COBRA, Medicare typically becomes the primary payer, and COBRA acts as secondary coverage. It is important to enroll in Medicare Part B promptly to avoid gaps in coverage and potential lifetime penalties. While COBRA can supplement Medicare by covering certain costs or providing benefits not covered by Medicare, it is generally not advisable to use it as a substitute for Medicare Part B once eligible.

Retiree Health Coverage

Some employers offer retiree health coverage to former employees. These plans are almost always secondary to Medicare, meaning Medicare pays first, and the retiree plan covers remaining eligible costs, such as deductibles, copayments, or services not covered by Medicare. Most retiree health plans require individuals to enroll in Medicare Parts A and B when first eligible.

The specific coordination rules and benefits of retiree health coverage can vary significantly by employer. Retirees should consult their former employer’s benefits administrator to understand how their specific plan integrates with Medicare. It is important to confirm whether the retiree plan provides creditable prescription drug coverage to avoid a late enrollment penalty for Medicare Part D.